Self Funded vs Fully Insured vs Level Funded Plans

Self Funded vs Fully Insured vs Level Funded Plans

August 10, 2021
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When it comes to group health insurance there are three types: fully insured, self-funded, and level funded.   A fully insured plan removes most of the risk from the employee and employer and puts it on the insurance carrier. The cost of the plan is typically higher.  n a self-funded program, the company provides all the funds for the medical claims. The monthly premiums are based on multiple factors with the anticipation of covering all the plan's needs (administration, claims and stop loss coverage).  A level-funded plan is when the employer makes a set payment each month that goes into a reserve account for claims, admin costs, and premiums for stop-loss coverage. If claims are lower than expected the remaining payments may be refunded at the end of the policy contract. 

With average premiums for families increasing by 22% in the last 5 years, employers look for ways to control group health insurance costs. Understanding what it means to be “fully insured” vs self-funded or level-funded is imperative to ensuring that employers offer the best health insurance packages to their employees and control costs. 

When it comes to group health insurance there are three types: fully insured, self-funded, and level funded.